ACCOUNTING HOMEWORK

22 Jun ACCOUNTING HOMEWORK

Complete the following activities from Chapters 3 and 4 in the Financial & Managerial Accounting textbook in Microsoft Word or Excel:

· Brief Exercise 3.3

· Exercise 3.1

· Exercise 3.5

· Exercise 3.8

· Exercise 3.10

· Brief Exercise 4.2

· Brief Exercise 4.3

· Brief Exercise 4.6

· Exercise 4.1

· Exercise 4.3

· Exercise 4.5

SHOW THE WORK! How did you do it??????

BRIEF EXERCISE 3.3

Recording Transactions Jan. 18 Issued capital stock in exchange for $400,000 cash.

Jan. 22 Borrowed $100,000 from its bank by issuing a note payable.

Jan. 23 Paid $200 for a radio advertisement aired on January 24.

Jan. 25 Provided $5,000 of services to clients for cash.

Jan. 26 Provided $18,000 of services to clients on account.

Jan. 31 Collected $4,200 cash from clients for the services provided on January 26.

a. Record each of these transactions.

b. Determine the balance in the Cash account on January 31. Be certain to state whether the balance sis debit or credit.

Exercise 3.1

Realization principle Credit

Time period principle Accounting period

Matching principle Expenses

Net income Accounting cycle

Each of the following statements may (or may not) describe one of these technical terms. For

each statement, indicate the term described, or answer “None” if the statement does not correctly

describe any of the terms.

a. The span of time covered by an income statement.

b. The sequence of accounting procedures used to record, classify, and summarize accounting

information.

c. The traditional accounting practice of resolving uncertainty by choosing the solution that leads

to the lowest amount of income being recognized.

d. An increase in owners’ equity resulting from profitable operations.

e. The underlying accounting principle that determines when revenue should be recorded in the

accounting records.

f. The type of entry used to decrease an asset or increase a liability or owners’ equity account.

g. The underlying accounting principle of offsetting revenue earned during an accounting period

with the expenses incurred in generating that revenue.

h. The costs of the goods and services used up in the process of generating revenue.

Exercise 3.5

The following information came from a recent balance sheet of Apple Computer Inc.

Assets- End of Year Beginning of Year

176.0 Billion 116.4 Billion

Liabilities- 57.9 Billion ?

Owners Equity- ? 76.6 Billion

Exercise 3.8

Shown below are selected transactions of the architectural firm of Baxter, Claxter, and Stone Inc.

April 5 Prepared building plans for Spangler Construction Company. Sent Spangler an invoice

for $11,000 requesting payment within 30 days. (The appropriate revenue account is

entitled Drafting Fees Earned.)

May 17 Declared a cash dividend of $2,000. The dividend will not be paid until June 25.

May 29 Received a $4,500 bill from Bob Needham, CPA, for accounting services performed

during May. Payment is due by June 10. (The appropriate expense account is entitled

Professional Expenses.)

June 4 Received full payment from Spangler Construction Company for the invoice sent on

April 5.

June 10 Paid Bob Needham, CPA, for the bill received on May 29.

June 25 Paid the cash dividend declared on May 17.

a. Prepare journal entries to record the transactions in the firms accounting records.

b. Identify any of the above transactions that will not result in a change in the company’s net income.

Exercise 3.10

Janet Enterprises incorportated on May 3, 2015. The company engaged in the following transactions during its first month of operations:

May 3 Issued capital stock in exchange for $950,000 cash.

May 4 Paid May office rent expense of $1,800.

May 5 Purchased office supplies for $600 cash. The supplies will last for several months.

May 15 Purchased office equipment for $12,400 on account. The entire amount is due June 15.

May 18 Purchased a company car for $45,000. Paid $15,000 cash and issued a note payable for

the remaining amount owed.

May 20 Billed clients $120,000 on account.

May 26 Declared a $8,000 dividend. The entire amount will be distributed to shareholders on

June 26.

May 29 Paid May utilities of $500.

May 30 Received $90,000 from clients billed on May 20.

May 31 Recorded and paid salary expense of $32,000.

A partial list of the account titles used by the company includes:

Cash Dividends Payable

Accounts Receivable Dividends

Office Supplies Capital Stock

Office Equipment Client Revenue

Vehicles Office Rent Expense

Notes Payable Salary Expense

Accounts Payable

Utilities Expense

Prepare journal entries, including explanations, for the above transactions.

b. Post each entry to the appropriate ledger accounts (use the T account format illustrated in

Exhibit 3–8 on page 110).

c. Prepare a trial balance dated May 31, 2015. Assume accounts with zero balances are not included in the trial balance.

Brief Exercise 4.2

On February 1, Watson Storage agreed to rent Hillbourne Manufacturing warehouse space for

$300 per month. Hillbourne Manufacturing paid the first three months’ rent in advance.

a. Prepare the necessary adjusting entry for Hillbourne Manufacturing on February 28, assuming

it recorded the expenditure on February 1 as Prepaid Rent.

b. Prepare the necessary adjusting entry for Watson Storage on February 28, assuming it recorded

Hillbourne Manufacturing’s payment as Unearned Rent Revenue.

Brief Exercise 4.3

On March 1, Phonic Corporation had office supplies on hand of $1,000. During the month, Phonic

purchased additional supplies costing $500. Approximately $200 of unused office supplies remain

on hand at the end of the month.

Prepare the necessary adjusting entry on March 31 to account for office supplies.

Brief Exercise 4.6

Jasper’s unadjusted trial balance reports Unearned Client Revenue of $4,000 and Client Revenue

Earned of $30,000. An examination of client records reveals that $2,500 of previously unearned

revenue has now been earned.

a. Prepare the necessary adjusting entry pertaining to these accounts.

b. At what amount will Client Revenue Earned be reported in Jasper’s income statement?

Exercise 4.1

Listed below are 9 technical accounting terms used in this chapter:

Unrecorded revenue, Adjusting entries ,Accrued expenses,

Book value, Matching principle, Accumulated depreciation,

Unearned revenue, Materiality, Prepaid expenses.

Each of the following statements may (or may not) describe one of these technical terms. For each

statement, indicate the accounting term described, or answer “None” if the statement does not correctly

describe any of the terms.

a. The net amount at which an asset is carried in the accounting records as distinguished from its

market value.

b. An accounting concept that may justify departure from other accounting principles for purposes

of convenience and economy.

c. The offsetting of revenue with expenses incurred in generating that revenue.

d. Revenue earned during the current accounting period but not yet recorded or billed, which

requires an adjusting entry at the end of the period.

e. Entries made at the end of the period to achieve the goals of accrual accounting by recording

revenue when it is earned and by recording expenses when the related goods and services are

used.

f. A type of account credited when customers pay in advance for services to be rendered in the

future.

g. A balance sheet category used for reporting advance payments of such items as insurance, rent,

and office supplies.

h. An expense representing the systematic allocation of an asset’s cost over its useful life.

Exercise 4.3

The Freemont Flyers, a professional soccer team, prepares financial statements on a monthly basis.

The soccer season begins in May, but in April the team engaged in the following transactions:

1. Paid $1,500,000 to the municipal stadium as advance rent for use of the facilities for the six-month

period from May 1 through October 31. This payment was initially recorded as Prepaid Rent.

2. Collected $6,000,000 cash from the sale of season tickets for the team’s home games. The

entire amount was initially recorded as Unearned Ticket Revenue. During the month of May,

the team played several home games at which $750,000 of the season tickets sold in April

were used by fans.

Prepare the two adjusting entries required on May 31.

Excerise 4.5

The geological consulting firm of Gilbert, Marsh, & Kester prepares adjusting entries on a monthly

basis. Among the items requiring adjustment on December 31, 2015, are the following:

1. The company has outstanding a $50,000, 9 percent, two-year note payable issued on July 1,

2014. Payment of the $50,000 note, plus all accrued interest for the two-year loan period, is due

in full on June 30, 2016.

2. The firm is providing consulting services to Texas Oil Company at an agreed-upon rate

of $1,000 per day. At December 31, 10 days of unbilled consulting services have been

provided.

a. Prepare the two adjusting entries required on December 31 to record the accrued interest

expense and the accrued consulting revenue earned.

b. Assume that the $50,000 note payable plus all accrued interest are paid in full on June 30, 2016.

What portion of the total interest expense associated with this note will be reported in the firm’s

2016 income statement?

c. Assume that on January 30, 2016, Gilbert, Marsh, & Kester receive $25,000 from Texas Oil Company in full payment of the consulting services provided in December and January. What

portion of this amount constitutes revenue earned in January?